Question
The depreciation rate of capital in the US is 8 = 0.043 and the population growth rate is GL = 0.007. Moreover, Y/K is
The depreciation rate of capital in the US is 8 = 0.043 and the population growth rate is GL = 0.007. Moreover, Y/K is around 0.35 on average over the last 60 years in the US (see the graph below). If the saving rate is s = 0.2 in the US, then find the long-run growth rate of average income in the US according to the Solow's model. (Note: To cross-check Compare your theoretical result with the actual growth rate of average income in the US which is 2%.) 0,43 0,41 0,39 0,37 0,35 0,33 0,31 0,29 0,27 0,25 Y/K in the US 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001
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